China To Assist Ukraine With $3.6B Loan Amendment

Photo courtesy of RIA Novosti/Grigoriy Vasilenko.

China will amend a $3.6 billion loan agreement with Ukraine that was signed in 2012 to provide the nation with much needed additional funding for various projects in the nation’s energy sector, RT reports.

According to a statement released on Thursday, The National Bank of China has agreed to extend a loan for a range of projects with Ukraine’s cash-strapped Naftogaz.

“Given the current situation in Ukraine, the Ministry of Energy and Coal Industry of Ukraine and Naftogaz continue negotiations about the possibility to substitute some of the projects and partially extend the lending purpose of the credit agreement signed by Naftogaz of Ukraine and the China Development Bank in 2012,” the statement said.

With the additional funding from China, Naftogaz will be able to fund upgrades to the country’s biggest gas company Ukrgazvydobuvannya, in addition to the construction of the Poland-Ukraine gas pipe interconnector.

“So far there are no talks on changing other contract terms or signing new deals with other Chinese institutions,” Naftogaz added.

The CEO of Naftogaz, Andrey Kobolev, admitted on Wednesday that the firm has been on the brink of default since 2009.

The Ukrainian gas company is dangerously approaching deadline for the March advance payment for Russian gas deliveries. And if Ukraine does not pay, Russian supplies of gas may be cut on Saturday.

On Wednesday, Russian President Russia Vladimir Putin warned that gas supplies to Ukraine will be cut off if Kiev fails to pay in “three or four days” and “will create a problem” for gas transit to Europe.

Last week Naftogaz suspended its gas supplies to Donbass, due to damage to the pipeline.